American Express Ranks Highest in Credit Card Customer Satisfaction for Second Consecutive Year
More than half (52%) of credit cardholders in Singapore say they are motivated to use their primary card because of the ability to receive cashback rewards, but these cardholders end up being notably less satisfied with their issuer, according to the J.D. Power Singapore Credit Card Satisfaction Study,SM released today.
The study, now in its second year, measures customer satisfaction with their credit card issuer by examining six key factors: interaction; credit card terms; billing and payment; rewards; benefits and services; and problem resolution. Satisfaction is calculated on a 1,000-point scale.
Among cardholders who choose their card based on cashback, overall satisfaction is 712 and their monthly spend averages $1,022. In contrast, among cardholders who choose their card based on service-related reasons, such as better mobile/tablet app for account management, better customer service and better benefits, satisfaction scores are significantly higher (785, 753 and 745, respectively).
“Card issuers have been aggressively pushing cashback rewards cards into the marketplace and, to a certain extent, they are rightly responding to the rising demand that customers have for this reward,” said Gerrit Kuyntjes, vice president and general manager at J.D. Power. “However, in doing so, they elevate customers’ expectations of cashback rewards to unrealistic levels. Failure to deliver on those perceived expectations will have a substantial negative effect on customer satisfaction since more than half of their customer base is expecting this perk.”
Additionally, the study finds that 20% of cardholders indicate the rewards programme offered by their primary card is unattractive, underlining the need for card issuers to design rewards that better meet changing customer desires.
The study also illustrates the effect low satisfaction has on retention rates. Among highly dissatisfied customers (overall satisfaction scores of 611 and lower), 26% say they “probably/ definitely would” switch cards in the next 12 months. In contrast, among customers who are highly satisfied (overall satisfaction scores of 787 and higher), the defection level drops to 15%.
Mobile Digital Wallets Off to a Promising Start
More than one-fourth (26%) of cardholders now use mobile digital wallet technology such as Apple Pay, Android Pay, Google Wallet or Samsung Pay, which was launched earlier this year. Early adopters of this technology—nearly half of whom use Apple Pay—indicate greater satisfaction with their card issuer and have higher spend on their credit card.
The average satisfaction score among users of mobile digital wallets is 718, which is 29 points higher than among those who do not use digital wallets. Additionally, mobile digital wallet users spend an average of $1,183 monthly, or $280 higher than among those who do not.
“It is encouraging to see mobile digital wallet technology not only gaining traction but also helping to increase customer satisfaction with their credit card issuer,” said Gordon Shields, director at J.D. Power. “Card issuers should continue to press on in their marketing efforts to further educate customers on the benefits of switching to digital wallets.”
The following are additional findings of the 2016 study:
- Mobile Wins Big: Mobile app usage has increased this year to 29%, up from 21% in 2015. Satisfaction among customers who use their credit card issuer’s mobile app is 725, compared with 685 among those who do not use a mobile app.
- Reward Programmes Continue to Confuse: Nearly 18% of cardholders perceive that card issuers are making their rewards programmes harder to understand. The changing conditions for cardholders to earn and redeem rewards, as well as limitations on offers and promotions, can make it difficult for cardholders to get the most out of their cards.
- Lack of Understanding of Credit Card Terms: Foreign currency and transaction fees are the most common areas in which customers lack understanding. Nearly half (47%) of all cardholders say they partially understand or completely do not understand foreign currency and transaction fees.
- Low Interest Rate Awareness: More than one-third (37%) of cardholders are not aware of their credit card interest rate. Even among customers who carry a balance on their credit card, and hence are affected more by an Annual Percentage Rate (APR) on their outstanding balance, 40% say they partially or do not at all understand their interest rate.
- Problem Incidences Decline from Last Year: Only 10% of customers have experienced a problem with their card in the past 12 months, a decline of four percentage points from last year. Late or annual fees is the problem most commonly reported by customers (29%), followed by issues with rewards programmes (16%). However, satisfaction is most affected if the problem is related to poor customer service.
American Express ranks highest in credit card customer satisfaction for a second consecutive year with an overall satisfaction score of 738. American Express performs particularly well in five of the six study factors: interaction; credit card terms; billing and payment; rewards; and benefits and services.
POSB and Citibank rank second and third with scores of 706 and 698, respectively. POSB performs particularly well in the customer interaction and billing & payment factors, while Citibank performs particularly well in billing & payment.
The 2016 Singapore Credit Card Satisfaction Study is based on responses from 2,927 cardholders. The study was fielded in August-September 2016.